Brussels, 21/12/2006 (Agence Europe) - The Commission has opened a formal investigation under EC Treaty state aid rules into the sale of Bank Burgenland. The Land of Burgenland decided to sell the bank in March 2006 to the Austrian insurance company, Grazer Wechselseitige Versicherung AG (GRAWE), for the sum of €100.3 million, although the tender procedure had also produced an offer of €155 million by an Ukrainian/Austrian Consortium. The Commission has to make sure that the tender was conducted in a non-discriminatory manner and that the sale did not involve incompatible state aid. “The Commission must check whether Land Burgenland had objective, transparent and non-discriminatory reasons to favour the offer of Grazer Wechselseitige Versicherung AG. Otherwise, the sale might involve state aid that may be illegal under EU rules”, commented Commissioner Neelie Kroes.
The Commission investigation will mainly aim at clarifying why the Burgenland did not request a provisional assessment of the two bidders by the Austrian Financial Market Authority (FMA) before deciding. It will also cover the issuance of additional bonds by Bank Burgenland just before the sale. This operation increased the liability of Land Burgenland under the public guarantee measure, the Ausfalhaftung, from which Bank Burgenland benefited (as a public bank) until the sale (this guarantee in any event has to be abolished by 1 April 2007), following an agreement between Austria and the Commission - (see EUROPE 8435). This appears to be in contradiction with one of the tendering criteria requiring the continuation of Bank Burgenland without the use of the guarantee. (cd)